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Hedge fund manager Hall says world market 'not awash in oil'

Andy Hall, one of the best-known oil traders who's bullish on prices, said the decline in the oil market isn't a repeat of 1998 or 2008.

PHOTO: EPA

[NEW YORK] Andy Hall, one of the best-known oil traders who's bullish on prices, said the decline in the oil market isn't a repeat of 1998 or 2008.

The absence of "extreme contango," which occurs when commodities prices close to delivery are cheaper than those to be delivered at later dates, suggests that "the world, whilst moderately oversupplied, is not awash in oil," Mr Hall said in a letter to investors.

Oil prices, which plunged 32 per cent in 1998 and 54 per cent in 2008, are down more than 50 per cent in the past year. Mr Hall, who runs hedge fund firm Astenbeck Capital Management, said US crude output through the remainder of 2015 will decline 6 per cent from the first half's average. He said he expects to see a decline in production forecasts by the International Energy Agency.

There is probably more than 200 million barrels of crude oil storage capacity still available, Hall said in the letter, a copy of which was obtained by Bloomberg.